Insights into Economic Rent and Wealth Distribution
Explore the concepts of economic rent, wealth distribution, and natural laws governing production with insights from Henry George's theory. This presentation delves into how rent is determined by land quality and access, impacting production levels and wealth distribution dynamics. Gain a deeper understanding of the economic principles shaping our political economy.
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Presentation Transcript
LECTURE 5 The Natural Laws Concerning the Production and Distribution of Wealth
RENT WAGES INTEREST
After all the fertile land in the immediate neighbourhood of the first settlers were cultivated, if capital and population increased, more food would be required, and it could only be procured from land not so advantageously situated.
Thus by bringing successively land of a worse quality, or less favourably situated into cultivation, rent would rise on the land previously cultivated.
Rent is that portion of production (or, wealth) claimed in return for access to land, when land of equal quality is no longer freely available.
Rent is determined by the margin of production. That is, rent equals the amount of produce in excess of what could be produced from the poorest land in use with the same amount of labor and capital. Progress and Poverty, p.86
Subsistence requires 60 units of wealth Commercial land now yields 300 units of wealth
Rent Graphically Illustrated 50 60 70 80 90 100 50 60 70 80 90 100 50 60 70 80 90 100 50 60 70 80 90 100 50 60 70 80 90 100 50 60 70 80 90 100 50 60 70 80 90 100 50 60 70 80 90 100 50 60 70 80 90 100 50 60 70 80 90 100 Best land yielding 100 units of wealth
LAND STILL NOT FULLY OCCUPIED AND FREELY AVAILABLE / NOW FULL 50 60 70 80 90 100 50 60 70 80 90 100 50 60 70 80 90 100 50 60 70 80 90 100 50 60 70 80 90 100 50 60 70 80 90 100 50 60 70 80 90 100 50 60 70 80 90 100 50 60 70 80 90 100 50 60 70 80 90 100 0 0 0 0 10 RENT S CLAIM ON WEALTH
STILL FREE / NOW FULLY OCCUPIED AND YIELDING RENT 50 60 70 80 90 100 50 60 70 80 90 100 50 60 70 80 90 100 50 60 70 80 90 100 50 60 70 80 90 100 50 60 70 80 90 100 50 60 70 80 90 100 50 60 70 80 90 100 50 60 70 80 90 100 50 60 70 80 90 100 0 10 20 30 40 RENT S CLAIM ON WEALTH
Wealth Distribution Stage One
Wealth Distribution Stage Two Wealth from Labor and limited Capital Goods 125 Wages Interest 500
Wealth Distribution Stage Three Wealth Distributed between the Three Factors of Production 100 180 Rent Wages 720 Interest
Where land is free and labor is assisted by capital, wages will consist of the whole produce less what is necessary to induce the storing up of labor as capital. Where land is subject to ownership and rent arises, wages will be fixed by what labor could secure from the highest natural opportunities open to it without paying rent (i.e., the margin of production). ...
Where all natural opportunities are monopolised, wages may be forced by competition among laborers to the minimum at which they will consent to reproduce. Progress and Poverty, p.116
EXTERNALITY tendency NATURAL LAW
